RICS: National property market has turned ‘consistently negative’

Buyer demand, new instructions and agreed sales all continued falling in November, according to a downbeat update from the Royal Institution of Chartered Surveyors (RICS).

The latest RICS UK Residential Market Survey showed overall activity continues to weaken across the sales market, with higher interest rates and a difficult macroeconomic outlook both taking their toll on buyer sentiment. 

Buyer demand fell for the seventh month in a row, with the net balance of -38% of respondents highlighting a drop.

Whilst this is less negative than the -53% reported in the previous month, the report said the market remains in “a firmly downward trend with indications that this will continue in the near term.”

For agreed sales, a national net balance of -35% was reported over this survey period indicating a continued decline in sales activity. 

This is also marginally less negative than the reading of -45% posted in October, but is the second month in a row that respondents across every UK region reported a decline in agreed sales.

The report said this demonstrates “what is a now a consistently negative picture at the national level.”

The survey’s measure of new instructions coming onto the sales market also remains in negative territory, posting a net balance of -9% at the national level. 

This has at least meant that average stock levels on estate agents books ticked up marginally in November from 34 to 35 properties, according to the report.

A net balance of -25% of survey participants witnessed a fall in house prices at the national level over the month, the lowest reading since May 2022. 

Over the coming twelve-months, an aggregate net balance of -61% of contributors foresee a further decline in house prices, the RICS said.

A drop off in the sales market activity stands in contrast to clear growth in the lettings market, according to the report.

Tenant demand continues to rise, with a net balance of +35% of respondents reporting a pick-up in November. 

The flow of fresh supply becoming available on the rental market continues to dwindle, as a net balance of -27% of respondents highlighted a decline in landlord instructions this month, which is predicted to drive rents higher. 

Simon Rubinsohn, RICS chief economist, said: “The overall tone of the latest RICS Residential Survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance. However, anecdotal comments from respondents capture the very real significant divergences in market behaviour at a more localised level.

“Although the headline price balance recorded two consecutive modest monthly falls in prices, and the forward-looking series indicate that this trend will extend through the coming months, the likely 'job-rich' recession suggests the downturn in the housing market this time could be shallower compared with past experiences. 

“Meanwhile, the imbalance in the rental market remains significant as landlord instructions continue to fall and is consistent with further increases in rents, even if the momentum does appear to be slowing just a little.”